However, although retail sales generally slowed, they also rose by 0.4% in December from the previous month, according to additional figures from the Commerce Department.
December’s stronger than anticipated inflation data puts further pressure on the Federal Reserve to stick to its rate hiking agenda.
The Fed raised interest rates by 0.25% last month in its third hike of 2017, which left rates at their highest level since the financial crisis and the fall of Lehman Brothers.
The US central bank has scheduled three rate rises this year and these latest figures have seen the pound reach its highest level against the dollar since the EU referendum.
Miles Eakers, chief market analyst at Centtrip, said: “Inflationary pressure remains stubbornly below the Fed’s target of 2%. Coupled with softer retail sales, the US Dollar remains at its lowest level of 2018.
“However, the fact inflation did tick higher than economists expected is likely to cause the greenback to make some gains against the euro and the pound.”